Monday, August 22, 2016

Real wage income per capita

On Friday I updated the measure of real aggregate wages, which in my opinion tells the best story of how well an economy is delivering an increase in buying power to average Americans.

But in order to see how that is benefitting the average American individually vs. the economy as a whole, we want to take a per capita measure. Ideally we want to exclude those receiving Social Security and Medicare benefits, since typically these people are not relying on wages -- and as the graph below shows, there is a burgeoning number of the demographic over 65 years old:

Ideally I would want to measure all ages below 65, but since that statistic isn't readily available on FRED, I picked the next best number, which is total population between age 16 and 65. Measured thus, here is real wages per capita:

It is easy to see that the 1990s and 1960s delivered the best growth, while the 1970s were awful, and the 2000s were close behind.

Also note that within the last year, the past records of the early 1970s and 1999 was finally surpassed.

Finally, let's compare growth from the trough in 1982:

with growth since the trough in 2009:

As you can see, growth in the 1980s is still slightly better than growth i the last 6+ years.

Still, this is a good explanation for why, despite serious inequality of income and wealth, there hasn't been a decisive outcry in 2016.

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